A comparative analysis of woody biomass and coal for electricity generation under various CO2 emission reductions and taxes

Mitigating global climate change via CO2 emission control and taxation is likely to enhance the economic potential of bioenergy production and utilization. This study investigated the cost competitiveness of woody biomass for electricity production in the US under alternative CO2 emission reductions and taxes. We first simulated changes in the price of coal for electricity production due to CO2 emission reductions and taxation using a computable general equilibrium model. Then, the costs of electricity generation fueled by energy crops (hybrid poplar), logging residues, and coal were estimated using the capital budgeting method. Our results indicate that logging residues would be competitive with coal if emissions were taxed at about US$25 Mg-1 CO2, while an emission tax US$100Mg(-1) CO2 or higher would be needed for hybrid poplar plantations at a yield of 11.21 dry Mg ha(-1)yr(-1) (5 dry tons ac(-1)yr(-1)) to compete with coal in electricity production. Reaching the CO2 emission targets committed under the Kyoto Protocol would only slightly increase the price of fossil fuels, generating little impact on the competitiveness of woody biomass. However, the price of coal used for electricity production would significantly increase if global CO2 emissions were curtailed by 20% or more. Logging residues would become a competitive fuel source for electricity production if current global CO2 emissions were cut by 20-30%. Hybrid poplar plantations would not be able to compete with coal until emissions were reduced by 40% or more. (c) 2005 Elsevier Ltd. All rights reserved.